Auctions have been around for centuries. However, it wasn’t easy to guess how popular they were on a global scale until eBay appeared. In 1995, Pierre Omidyar came up with creating a unique auction website.
The first item sold on the site was a faulty laser pointer, for which the client paid over $13. After contacting the buyer, Pierre asked why he needed a defective item. The answer surprised him – it turns out that the buyer was a collector of faulty laser pointers. The owner himself, perhaps, couldn’t even assume that his undertaking would turn into a significant world-class business.
Today there are thousands of different collectors in the world, therefore if businesses prefer setting up an online auction in 2022, this is a promising idea.
Business Models of an Auction Platform
Various auction websites are top-rated and bring in a lot of income. For example, annual sales of American auction house Heritage Auctions increased by roughly 60% in 2021 over the previous year. Heritage auctions took over $1.4 billion in 2021.
Moreover, Sotheby’s auction house recorded the highest sales value worldwide at the end of 2020 with $5 billion.
Reserve Price Model
In this model, sellers set a reserve price for the product that they put up for an auction.
The reserve price is the minimum price of the goods the seller is ready to give.
The auction will end as soon as the bidding starts and the auction amount reaches or exceeds the reserve price. There is no time limit in this form of auction, and the bidder who gets the reserve price first can receive the goods.
Incremental Auction Model
In this model, the seller or the auction site administrator determines the added value for each product participating in the auction. Added value is a certain amount added to the last bet. For example, the seller sets a different value of $10. When a bidder offers $50, the next bidder can put the amount above $60.
Automatic Auction Module
An automatic auction module website is when the bidder bids on the maximum amount sellers are willing to pay for the product. An option is possible when participants receive updated information about the successful bets and that the bid did not work.
Key Features of an Auction Website
Auction websites, like others, have their peculiarities. Next, we will describe the necessary elements of auction sites, regardless of which auctions they conduct.
Payment Systems
To process transactions between auction sites and customers, the integration of the payment system is necessary.
Such systems as Stripe, Paypal, and others can provide security, convenient transactions, and currency exchange.
Community Tools
An auction website requires different community tools to communicate between users. Developers should be in charge of operational communication on the auction platform, which helps to coordinate the company’s marketing strategies and meets customers’ needs.
As a rule, companies use several tools at the same time. These can be social networks, visual graphics templates, spreadsheets, and form filling. We also recommend using special programs for automatic mailing of emails and advertising.
Photo Gallery
An auction website needs clear and high-quality images to create successful auctions. A popular solution among auction websites is to create a gallery. It will help companies present their brand, better represent their product on the market, and build the best conditions for selecting and purchasing auction goods or services.
Before creating a photo gallery, companies need to investigate user behavior and determine which visual elements they pay more attention to. For this purpose, companies can use such tools as CrazyEgg, a unique software service aimed at monitoring visitors’ actions on a web page of interest, which is helpful for:
- Getting data on clicks from the site visitors
- Finding out why people are leaving the auction site
- Discovering data-enabled conversion capabilities
3 Ways of Creating an Auction Website
Thinking of a successful auction creation website is not enough. Companies need to follow these popular development ways, and success will be more realistic.
Ready-Made Templates
There are various ways to create an auction website. The easiest way is with the help of ready-made templates, for example, WordPress.
Template solutions are used to simplify and reduce the cost of a project as much as possible, but this is a сhallenge for complex website issues. Template solutions are effective when the auction website has no strong competitors. Also, ready-made solutions have problems with security and updates, so it is necessary to think about improving these critical aspects. Here are three famous WordPress themes for creating online auctions:
- Auction Theme
- WordPress Penny Auction theme
- Property Bid Auction Template
MVP Development
MVP (Minimum Viable Product) is an auction site with minimal but sufficient features to meet the basic needs of users. For an online auction, it is necessary to create an opportunity to put the goods up for sale, upload a photo or video, make a payment and arrange delivery.
As soon as the essential functions are implemented, businesses should start testing their MVP. It will be great to try the concept with a minimal budget and identify critical errors. In addition, using MVP, auction companies can get feedback to improve their design and functionality.
Custom Development
Some entrepreneurs want to create a сustom product if they have enough money or have received funding for their auction projects at the idea stage.
Developing a custom auction website is an expensive undertaking that can lead to both great success and significant financial losses in case of failure. Moreover, business people deciding on custom development should be assured that the product is necessary for the market.
Custom creation of an auction site provides such advantages as:
- thoughtful functionality and unique design
- absence of functionality overabundance on the platform
- the high degree of security in every detail
However, custom development of an auction site entails such consequences as an additional financial burden since the product costs more and lasts longer.
Discovery Phase
Whichever type of development an auction site company will choose, experienced experts advise conducting the Discovery Phase.
Discovery Phase is the first stage of the product development cycle. Companies can check project ideas, their values, market competition, the necessity of developing a new auction website, and a clear understanding of the development cost and time.
45% of software development projects exceed their estimated budget, which means they are experiencing significant difficulties. Almost half of these projects fail before reaching the launch.
Moreover, companies can avoid these sad statistics using the Discovery Phase.
Discovery Phase helps in:
- researching the market and competitors
- testing ideas
- finding out the mood of the audience and their needs
- choosing the best tech stack
- developing several backup plans
- deciding the best solutions to complex problems in advance.
Conclusion
In 2022, creating an online auction is essential for entrepreneurs who have a basic understanding of auctions and their work and want to do a solid business with minimal investment. Hundreds of different auctions are held every day, and this niche always stays relevant. It is only necessary to realize which direction to move in and which is the best way to choose to create an auction site so as not to fail.
At the moment, we recommend using one of three development options – ready-made templates, custom development, or creating an MVP from scratch.
Companies need to focus on three critical factors: time, money, and software development experience.
Experienced companies will not advise business development without the Discovery Phase because it is risky. The Discovery Phase will help companies better analyze the market, calculate possible problems, and even before development, think through alternative solutions, and choose the best tech stack. The company will benefit from starting the first product development cycle, aka Discovery Phase, and protecting itself from future financial losses.
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